September 2008

The next US president will have a vital role in determining how the United States, and the world, tackles climate change. To further the debate, Amanda Leigh Haag submitted questions on climate and energy policy to both presidential candidates. The campaign for Democrat Barack Obama responded directly, but the Republican campaign did not respond. John McCain's views are taken from the Republican platform.

In the News

Carbon dioxide emissions are increasing faster than predicted (but global temperatures remain flat—oh sorry, that’s not in the story)
Juliet Eilperin, Washington Post, 26 September 2008
British government split on new coal-fired power plant
Andrew Grice, Independent, 26 September 2008
GAO finds fault with credibility of carbon offsets
Stephen Power, Wall Street Journal, 26 September 2008
In surprise move, EU refuses to relax auto mileage rules
Pete Harrison, Reuters, 25 September 2008
Hollywood starlet dares to reveal that she’s green

Yahoo News, 25 September 2008
California taxpayers pay for legislators’ gasoline
(and their cars, too)
AP/MSNBC, 25 September 2008
Obama and McCain on global warming: compare and contrast
Nature Magazine Reports, 24 September 2008
EU tells eastern member nations that they must stay poor

Pete Harrison, Reuters, 22 September 2008
News You Can Use
CEI's Myron Ebell
The Guardian reports on a study that has found that those people who are trying to lead the greenest lifestyles tend to be responsible for much higher than average carbon emissions. That’s because they tend to be higher income people who take lots of airplane flights. Sadly, therefore, as David Adams writes, "People who believe they have the greenest lifestyles can be seen as some of the main culprits behind global warming." Al Gore, take note.
Promises, Promises
The Democratic and Republican nominees also spoke at the annual pow-wow of the Clinton Global Initiative this week. Senators Barack Obama (D-Ill.) and John McCain (R-Az.) presented almost indistinguishable plans to ration energy with a cap-and-trade program and save us from global warming.  They also both vowed to reduce global poverty and revive the U. S. economy. The little difficulty that no one asked them about is that cap-and-trade will create chronic economic stagnation and increase poverty around the world.
Inside the Beltway
CEI's Myron Ebell

The mad rush to pass lots of bad bills at the end of the Congress has been made even more hectic and difficult this week by all the time taken up with the Wall Street bailout.  The House and Senate this week both passed a broad bill extending a wide range of tax credits, including credits for renewable energy.  Both bills would extend refundable tax credits for solar, wind, geothermal, and biomass energy and for energy-efficient appliances and buildings and for plug-in hybrid cars.  A proposal to extend the credit for ethanol was not included, but it doesn’t expire until 2010, so Big Ethanol has plenty of time to convince Congress to keep the tax dollars flowing.  It isn’t clear whether the House and Senate will be able to agree on the tax bill because of major differences in other areas.  If they cannot agree, then wind and solar installations will plummet.
Since the House and Senate have given up on passing appropriations bill for the various departments, a continuing resolution, or CR, must be sent to the President before the new fiscal year starts on October 1st. The House on Wednesday overwhelmingly passed a CR funding the government until March 2009.  It did not include the moratorium on offshore oil and gas exploration in 85% of federal waters surrounding the lower 48 States that has been in place since Fiscal Year 1982.  Nor did it include the moratorium on production from oil shale in the Rocky Mountains .  This is a significant victory for House Republicans, who vowed to vote against any extension of the annual moratoria.  It has been reported that what convinced House Speaker Nancy Pelosi to drop the moratoria was a clear veto threat from the White House.
Senate Majority Leader Harry Reid (D-Nev.) and Senator Ken Salazar (D-Colo.) are trying to continue the oil shale moratorium by including it in a new economic stimulus package.  The House on Friday morning passed their version of a stimulus bill, which does not contain any oil shale language.  A vote to invoke cloture on the Senate stimulus bill, with the oil shale moratorium, failed on Friday by a vote of 52 to 42, with 60 votes needed.  Again, it’s not clear what the House and Senate may be able to agree on to send to the President in the next few days.
As for lifting the offshore moratorium, liberal Democrats in the House, led by Representatives Lois Capps (D-Calif.) and Frank Pallone (D-N. J.), have already vowed to put the moratorium back in place when the Congress returns next year.  Even if they fail, the offshore moratorium victory will be a symbolic one for several years.  The next President will have to decide whether to allow the Interior Department to prepare any offshore areas for leasing by competitive auction.  If he decides to go ahead with some lease sales, it will then take time to prepare them and for the winning bidders to start drilling exploratory wells.
In the States
CEI's Myron Ebell

The Regional Greenhouse Gas Initiative kicked off its cap-and-trade program with an auction of carbon allowances on Thursday. The results of the auction will be announced Monday and can be found on the RGGI web site. The mandatory plan aims to hold greenhouse gas emissions steady at 188 million tons of carbon dioxide-equivalent annually until 2014 and then make annual 2.5% cuts through 2018.

Only six of the ten northeastern States belonging to RGGI were ready to participate in the initial auction. The lucky six are Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont. Those still on the sidelines because of administrative or legislative delays are Delaware, New Hampshire, New Jersey, and New York. 

Trying hard to catch up with RGGI, the Western Climate Initiative also announced plans this week to create a cap-and-trade program to reduce greenhouse gas emissions in seven western States and four Canadian provinces.  According to the Los Angeles Times, the plan "covers about 20% of the U.S. economy and more than 70% of the Canadian economy, affecting power plants, industrial facilities and transportation, among other economic sectors." The Governors who have signed up are from Arizona, California, Montana, New Mexico, Oregon, Utah and Washington. The Canadian premiers are from British Columbia, Manitoba, Ontario and Quebec. State and provincial legislatures will have to agree before the cap-and-trade program goes into effect. The goal is to reduce emissions to 15% below 2005 levels by 2020.
Science Meets PR
CEI's Julie Walsh
Where was the press release from National Snow and Ice Data Center ?  In the past they had these breathless ones: “Arctic Sea Ice Reaches Lowest Extent for 2008”,  “Arctic sea ice extent at maximum below average, thin” and “Melt onset earlier than normal.”
However, yesterday’s statement was drearily entitled “Arctic Ice Begins Autumn Freeze Up.” On their website’s page with their list of “Milestones To Watch For”, they list the minimum sea ice extent date as important and whether it occurs earlier or later in the year, yet they don’t tell even tell us in their new press release when the minimum occurred or whether it was earlier or later this year. Yet from their graph, it was considerably earlier than last year. My sleuthing discovered that it was on September 12th.  And then with some more research I found this gem from an NSDIC press release in October of 2007: “In addition to the record-breaking retreat of sea ice, NSIDC scientists also noted that the date of the lowest sea ice extent, or the absolute minimum, has shifted to later in the year. This year, the five-day running minimum occurred on September 16, 2007; from 1979 to 2000, the minimum usually occurred on September 12.” So this year’s minimum occurred on the average minimum day from 1979 to 2000! You think their reporting is biased? Their new press release should have been titled: “Date of Minimum Sea Ice Extent Completely Normal.”
NSDIC does admit, though, that “perhaps the most interesting aspect of the 2008 melt season was the higher-than-average retention of first-year sea ice (see earlier entries, including April 7). Relatively thin first-year ice is more prone to melting out completely than older, thicker ice. However, more of this year’s first-year ice survived the melt season than is typical. Sea ice age maps from Sheldon Drobot, our colleague at the University of Colorado at Boulder , show that much more first-year ice survived in 2008 than in 2007. This is one of the reasons that 2008 did not break last year's record-low minimum. One cause of the high first-year ice survival rate was that this summer was cooler than in 2007.” I guess I shouldn’t hold my breath for articles on how those earlier alarmist reports were wrong.
The Latest on Al
CEI's Myron Ebell
Albert A. Gore, Junior’s $300 million dollar advertising campaign peddling global warming alarmism and energy rationing must not be convincing too many people. It’s no wonder. Have you seen any of the ads? This week the former Vice President and Senator and Representative called on the nation’s youth to block construction of new coal-fired power plants through civil disobedience. According to a Reuters story, Gore told the rich and the powerful meeting at the Clinton Global Initiative in New York City: "If you're a young person looking at the future of this planet and looking at what is being done right now, and not done, I believe we have reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration."
The problem with Gore’s "leadership" is always the same: it’s do as I say, not as I do. I have a suggestion. Before trying to stop new power plants from being constructed, why don’t young people concerned about greenhouse gas emissions concentrate on the root of the problem—energy consumers. They could start at the top with people who are using the most energy. For example, take Al Gore. He must use at least fifty times as much energy as the average person. Protesters could picket the several large houses he owns and could meet him whenever the private jet he uses for most of his frequent trips takes off or lands.


The Coming Energy Abundance

by William Yeatman on September 23, 2008

As politicians, consumers, and manufacturers fret over the price of oil, there's good news on the energy front: Natural gas production is booming from "huge shale beds found throughout North America," reports The New York Times. The improving technology of underground horizontal drilling and fracturing has opened up trillions of cubic feet of gas that had formerly been thought unobtainable. And natural gas can also be used to run automobiles (after about $2,000 in conversion costs). These and other alternative methods of lowering fuel prices could dramatically reshape not only energy policy but the global economy.

No one, including Gov. Sarah Palin, questions that Alaska's climate is changing more rapidly than any other state's. But her skepticism about the causes and what needs to be done to address the consequences stands in sharp contrast to the views of her running mate, Sen. John McCain, and place her to the right of the Bush administration and several other Republican governors.

Evidence is mounting in Britain that the Labor Party’s policy of replacing conventional sources of energy with renewables is leading to a major energy crunch.

Currently, Britain gets three-fourths of its electricity from natural gas, coal, and nuclear power. But domestic production of natural gas in the North Sea has peaked and is declining rapidly, and the Labor Party intends to retire by 2016 coal and nuclear power plants that now generate a third of Britain’s electricity. The plants will be shut down largely to comply with European Union environmental regulations.

To keep the lights on, the Labor Party plans to rely on renewable energy sources, which the government promises will generate 40 % of Britain’s electricity by 2020.

However, a number of recent studies cast doubt on the feasibility of Labor’s 2020 target. In July, the non-partisan Renewable Energy Foundation released a report warning that “a near fatal preoccupation with politically attractive but marginal forms of renewables seems to have caused a blindness towards the weakening of the UK’s power stations.” The report predicted steep increases in energy bills.

Last week, Iain Fells, emeritus professor of energy conversion at the University of Newcastle, issued a report, “A Pragmatic Energy Policy for the UK,” which states that the 2020 renewable energy targets were “demonstrably unattainable.” Prof. Fells warned of massive, disruptive blackouts if Britain continued with its current energy policy. 

The “success” of the EU’s climate policy has long been a talking point for those who want Congress to enact energy-rationing legislation to fight global warming. If Europe can do it, they assert, then so can the U. S.

In trying to shame the Congress into expensive-energy climate policies, global warming alarmists are abetted by European leaders, who routinely admonish countries like the United States, Japan and Canada for not keeping up with the EU’s efforts on climate change.

The problem with this line of reasoning employed by alarmists and Eurocrats alike is that the EU’s marquee climate policy—the Emissions Trading Scheme(ETS)—is a disaster.

The ETS is a cap-and-trade policy that works by having government assign emissions quotas (caps) to thousands of industrial users and suppliers of energy. As the cap shrinks, companies would have to find new ways to cut their carbon footprint. In any given year, if a company's emissions exceed its quota, it could avoid a penalty by purchasing surplus emission rights from a business that beat its target. The entire point of a cap-and-trade policy is to make businesses and consumers pay for carbon dioxide emissions. Because carbon dioxide is analogous to energy use, a cap and trade increases energy prices.

The EU ETS occurs in three phases: phase 1, 2005-2007; phase 2, 2008-20012; and phase 3, 2013-2020. Phase 1 was an abject failure, owing to a gross misallocation of free carbon emissions credits that led to a meltdown in their price, from 40 dollars a ton to 40 cents a ton. At that price, there was no incentive for companies to reduce emissions, which is why Europe’s greenhouse gas output increased by 2% during phase 1.

Phase 2 is supposedly much tougher than phase 1. Emissions caps have been slashed and the penalty for non-compliance has been increased significantly. That said, Phase 2 began only recently, in mid 2008, so it is still unproven.

In any case, EU leaders have postponed significant emissions cuts until phase 3 because they want to first negotiate an international climate change treaty to succeed the Kyoto Protocol, which is set to expire as phase 3 begins, in 2012. Otherwise, EU leaders would subject European industries to higher energy prices, and therefore a competitive disadvantage in the global marketplace.

For phase 3, EU leaders have promised to expand the ETS to energy intensive industrial sectors that now enjoy exemptions from carbon trading, like steel and aluminum manufacturing. They have also promised to auction nearly all the emissions credits, whereas governments can only auction up to 10 % of the credits during phase 2, and they could auction only 5 %  of the credits during phase 1 (only four of the 25 EU countries opted to auction credits in phase 1).

But Phase 1 is already in jeopardy, four years before it is slated to begin. Yesterday, the Financial Times reported that Germany, the EU’s largest economy, has indicated that it will opt-out of the next phase of the EU ETS, by granting heavy industry free carbon permits after 2013. The article quotes Merkel as saying that she “could not support the destruction of German jobs through an ill-advised climate policy”.

The auctioning of permits was supposed to ensure that the sort of misallocations that plagued phase 1 of the ETS could never occur again. If businesses have to pay to emit, then they would have the incentive to reduce their carbon footprint regardless of what their cap was.

Now Germany has opted out of the emissions auction in phase 3. The rest of the EU is likely to follow. Of course, it is unlikely that a plan to fight climate change can work if it excludes the largest emitters of greenhouse gases thought to cause rising temperatures.

EU climate policy is described as a model for the world to emulate, but it’s actually a warning for the world to heed. The ETS has demonstrated that “doing something” about global warming is expensive and difficult. It also indicates that states are unwilling to bear much of a burden to solve the supposed climate crisis.

T Boone Speaks

by William Yeatman on September 22, 2008

Today, Texas oilman T Boone Pickens discussed his “Pickens Plan” for energy independence at a National Press Club luncheon in Washington D.C.

For those of you ill-acquainted with T Boone’s plan, here’s how it works: (1) T Boone  invested heavily in wind and natural gas; (2) Pickens wants the federal government to force consumers to buy electricity generated from his wind turbines, so that they use less of his natural gas; and (3) he wants the federal government to force consumers to use his natural gas “saved” (displaced) by his wind power to fill their gas tanks, so that America can become free from its “addiction” to foreign oil.

There are a number of reasons why the plan is a bad idea. For one, the rationale for T Boone’s plan–America’s “dependence” on Middle Eastern oil–is a canard. In fact, Pickens’ true motivation is to get very, very rich.

There are also technical difficulties with T Boone’s plan. The wind doesn’t always blow, and it is unclear whether wind power is sufficiently reliable to generate base-load electricity.

Pickens wants us all to drive cars powered by natural gas.  Yet CNG-powered cars are heavier, much more expensive and take 20 hours to refuel at home.  They're just not a serious alternative to the gasoline-powered car.

T Boone’s plan is a major liability for taxpayers. Wind magnates like Pickens depend on generous tax payer subsidies without which they could not compete with conventional sources of energy, like coal. In 2007, the federal government allocated $724 million in benefits to wind energy, which accounts for less than 1 % of electricity generated in the U. S. T Boone wants the government to mandate that wind account for 20 % of the nation’s power, and the taxpayer burden would increase accordingly.

The Pickens Plan is a lemon, which is why he is spending $50 million on a public relations campaign to convince America that it’s a good idea. It may sound great in his commercials, but the Pickens Plan is awful for American consumers and taxpayers.

The Week in D. C.

by William Yeatman on September 22, 2008

While everyone is watching Wall Street’s meltdown, news from Washington seems unimportant and uninteresting. So before turning to what is going on in Washington, a few comments on the Wall Street mess.  First, the U. S. Climate Action Partnership has lost two of its members, Lehman Brothers and AIG (that is, in the latter case, assuming that the federal government will not want to retain membership in a lobbying coalition, which may be wrong).  Lehman Brothers was the most enthusiastic promoter of cap-and-trade on Wall Street.  That’s saying quite a lot because when current Treasury Secretary Henry Paulson (whose incompetent attempts to manage the crisis are making a disastrous situation much worse—may I remind you again that CEI actively opposed Paulson’s confirmation as Treasury Secretary) was head of Goldman Sachs, he said that the greatest foreign policy mistake in the history of the United States was not ratifying the Kyoto Protocol and that cap-and-trade was a golden opportunity for Wall Street to make tons of money. 

One of Lehman Brothers’ managing directors is Theodore Roosevelt the Fourth, the most prominent Republican environmentalist in the country.  Roosevelt serves as chairman of the board of the Pew Center on Global Climate Change, as vice chairman of the Wilderness Society, and as a board member of several other environmental pressure groups.  He was chosen to give the keynote address on environmental issues at the 2000 Republican Party Convention in Philadelphia.  And most deliciously, Roosevelt is on the board of the Alliance for Climate Protection, which was founded and is chaired by former Vice President Al Gore and is behind the $300 million “We Can Solve It!” public relations campaign. Gore’s green investment fund, Generation Investment Management, relied on Lehman Brothers for investment advice. Perhaps Lehman Brothers wouldn’t be bankrupt if its managing director had spent more time on company business and less time working for groups that promote the idea that energy rationing policies will be good for the economy. Just a thought.

As part of its effort to be an intellectual leader among investment banks, Lehman Brothers produced a big two-part report last year on the Business of Climate Change, which argued that companies needed to start accounting for the risks of climate change and get on the cap-and-trade bandwagon.  The report’s chief scientific adviser was Dr. James E. Hansen, director of NASA’s Goddard Institute for Space Studies and recent defender of terrorist activity directed against coal-fired power plants.  Let’s hope he got paid in stock options rather than cash.

Now, for the cheery news (comparatively speaking) from Washington.  The House on Wednesday passed another anti-energy bill by a vote of 236 to 189.  Two-hundred twenty one Democrats and 15 Republicans voted for the bill, while 176 Republicans and 13 Democrats voted against it.  The bill appears to break House Speaker Nancy Pelosi’s (D-Calif.) promise that she would never allow more offshore drilling because she had to save the planet.  It was advertised as an offshore drilling bill.  In reality, it would open some Outer Continental Shelf areas that are at least 50 miles from the coast, but permanently withdraw all areas within 50 miles, including waters surrounding Alaska that are currently not under moratorium.  The U. S. Geological Survey thinks nearly all the economically recoverable oil is within 50 miles of shore, including Alaskan waters.  In other words, open all the areas that have little or no oil, and close all the areas that probably do have lots of oil.  The bill would also cause investment in domestic oil production and refining to decrease by raising taxes on oil companies and use the additional tax revenue to pay off special interests like Boone Pickens and other producers of uncompetitive energy.

Senate Majority Leader Harry Reid (D-Nev.) said again this week that the Senate will vote on at least four pieces of anti-energy legislation in the next few days, including the House bill and the Gang of 10/then 16/now 20’s plan.  Like the House bill, the Gang’s plan would allow a tiny bit of offshore drilling and spend tens of billions of dollars on subsidizing wind and solar energy and ethanol.  But Reid is fixing it so that no amendments can be offered that would actually increase domestic oil and gas production.  The Senate may pass one or more of these bills, but it is unlikely that the House and Senate will agree on anything to send to the President before leaving town for the campaign.  The only thing they might agree on would be a bill to renew the refundable production tax credits for renewable energy because those enjoy overwhelming support among Republican as well as Democratic members.

House and Democratic leaders are thus trying to provide cover for members facing opponents in the November election who are using the gas price issue against them.  They will now be able to say that they took the tough vote in favor of offshore drilling.  Greenpeace and several other grassroots environmental pressure groups are trying to help this operation by attacking the bill as a sellout to big oil.  This might fool some people into thinking that Democrats in Congress have now caved in to public pressure on the drilling issue.     

The U.S. Senate could vote as early as Thursday on an energy bill that would provide $17 billion in renewable-energy tax incentives.

The international struggle to assert sovereignty over oil and gas rich Arctic waters heated up this week after Russian President Dimitri Medvedev suggested that the Federal Security Service (FSS) draw a formal border around Russia’s claimed territory. The Arctic is thought to hold 80 billion barrels of oil and up to 20 percent of the world’s natural gas deposits, but it is unclear which countries control what in the region. Under international law, each country is entitled to control an economic zone within 200 miles of its continental shelf, but the limits of the shelf are disputed, and Russia, the United States, Norway, Canada, and Denmark have made competing claims. In 2004, Russian President Vladimir Putin created the Arctic Directorate within the FSS (the successor to the KGB) to further Russia’s claim to over 460,000 square miles of the mineral-rich territory.